Transcript Xbox 360 (cont.)

Systematic Biases and
Culture in Project Failures
Instructor: Dr. Celeste Ng
Student Number:
(PM) 941637 周士為 941621 江秉憲
941622 黃政明 941627 張書銘
941634 黃峻亨 941635 吳宜憲
941405 戴志宇 967321 蔣欣燕
Table of Contents




Purpose
Influences of Project Outcome
Methodology
Case Study
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
941637 周士為
Airbus 380
Coast Guard Maritime Domain Awareness Project
Columbia Shuttle
Denver Baggage Handling
Mars Climate Orbiter and Mars Polar Lander
Merck Vioxx
Microsoft Xbox 360
NYC Police Communications System
Conclusion
Purpose


To understand how cultures can create an
environment in which systematic biases
would be occurred naturally.
Not only can through studying the systematic
biases help us to know about a failure project
easily but also helping us to prevent failures
from occurring in the future.
Why do Projects Fail?

Failures occur despite what we have
improved on any process related to projects.

Failures can be attributed to management and
decision-making process.

“Espoused theory” of organizations.
“Theory-in-practice” of organizations.

The Influences of Project Outcome
Methodology

The first step is to identify and define the
systematic biases as followed:
Data collection





From public & government
8 cases study
9 systematic biases
22 business professionals divided into 5
groups
Using a modified Delphi Method
Methodology (cont.)

The second step of the this article, the following
project failures are briefly summarized:
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Airbus 380
Coast Guard Maritime Domain Awareness Project
Columbia Shuttle
Denver Baggage Handling
Mars Climate Orbiter and Mars Polar Lander
Merck Vioxx
Microsoft Xbox 360
NYC Police Communications System
Airbus A380



Founded in 1970
Consortium of 16
independent companies with
facilities in France, Germany,
Britain, and Spain
A380 project- in 2000


Goal: a 800 passengers
superjumbo jet
Problem


versions of CATIA
designed for wiring
harness were
incompatible (software)
the ability to share design
specifications was
compromised (hardware)
967321 蔣欣燕
Airbus A380 (cont.)

Result








wiring failed to fit
halt production
postpone deliveries of the
aircraft for two years
redesign the wiring system
cost expected to exceed $6
billion
placed the program two years
behind schedule
Stock lost one-third of its value
Co-president was accused
Airbus A380 (cont.)


Reasons of project
failure
 failed to transform
itself (balkanized
organization
integrated company)
 Managers made
political rather than
economic decisions
Systematic biases?
Available Data
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Available data
1. Management at each of the
plants was limited to the data
that was available to them.
2. Thereby concluded that the
project was meeting its local
objectives. From their
perspective, they were on
schedule and within budget.
Available Data
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Groupthink
1. Insular nature of the separate
organizations created a limited
communication project culture.
2. A breeding ground for
groupthink.
3. Many of the practices and
procedures within these
organizational units went
unchallenged.
Available Data
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Illusion of Control
1. Management at the central
facilities in Toulouse initially
envisioned a centralized
organization with some control
over its divisions.
2. The inability of these divisions to
use the same version of CATIA
suggested that this transition was
far from effective.
Available Data
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Selective Perception
1. Selective perception occurs
when a problem is viewed from
a limited or narrow frame.
•
•
Organization was unable to move
toward an integrated enterprise
Top managers acted to protect
their former constituents, unaware
that incompatible software would
jeopardize the project.
Coast Guard Marine
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
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941634 黃峻亨
In 2001 ,the U.S. Department of Homeland Security and
the U.S. Coast Guard undertook a project that promised
to create the maritime equivalent of an air traffic control
system.
It combine long-rang e surveillance cameras, radar
systems, and information technology to automatically
identify vessels as they entered U.S.
It span 24 federal agencies responsible for the protection
of water-ways and coast s
Coast Guard Marine (cont.)



Phase One in Port of Miami
In the first phase of the project a complete surveillance
system, called Project Hawkeye, was to be developed
and implemented for the port of Miami.
It would track larger vessels with radar and smaller
vessels, even jet skis, using infrared cameras. Finally, a
software system would process the data to determine
which vessels posed a security threat and deserved
closer scrutiny.
Coast Guard Marine (cont.)



System Fails First Test
The cameras were ineffective in tracking the small boats,
the radar system proved unreliable when it incorrectly
identified waves as boats, the Automated Identification
System used for large boats failed to meet its objectives,
and the software systems, needed to make sense out of
these data, had yet to be installed.
While some data from the system was available to the
Coast Guard, they were unable use it.
Available Data
Selective perception
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Each separate agency focused only on
its immediate task, with apparently little
effort directed at integrating their role
with that of others.
Available Data
Selective perception
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
This was especially evident when federal,
state, and local agencies were unable to
coordinate their efforts in responding to
the Katrina hurricane disaster of 2005.
Available Data
Illusion of control
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
These leaders assumed that they
had control over the agencies and
subcontractors, when in fact
they did not.
Available Data
Illusion of control
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Control issues should have been
resolved before the project was
undertaken, not after.
Merck Vioxx



In 2000, the New England Journal of
Medicine published an article
suggesting that Merck
misrepresented clinical trial data on
the risks of Vioxx
Journal of the America Medical
Association, published a paper in
2001 finding that those who took
Vioxx were more than five times
more likely to experience a cardiac
event
Merck denied these claims, insisting
the findings were “flawed”. Then
revised the Vioxx label in 2002 to
reflect these added risks
Merck Vioxx (cont.)


On September 30, 2004,
after 84 million people had
taken the drug, and after
three years of denying the
drug could induce heart
attacks and stroke, it was
pulled from the shelves.
The legal consequences
were significant. Over 27000
claims incriminating data
were withheld during the
FDA review process.
Merck Vioxx (cont.)


New Jersey jury ruled unanimously in March 2007 that Merck
committed consumer fraud by intentionally suppressing,
concealing, or omitting information on the risks of Vioxx.
Merck proposed an out-of-court settlement to the remaining
complainant at a cost of over $5 billion
Available Data
Sunk cost
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Financial pressures
The average cost to bring a drug
to market exceeds $1 billion.
As drug trials proceeded
from animal to human trials
and eventually to FDA review, it was
not unreasonable to conclude with
the project increased as investment
increased.
Available Data
Sunk cost
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
After incurring nearly $1 billion to
develop the drug, after generating
$2.5 billion in sales during 2003,
it was not difficult to understand
why the company resisted pressure
to remove Vioxx from the market.
Available Data
Conservatism
Conservatism &
Selective perception
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Merck suppressed early data
suggesting that the drug could have
serious and sometimes tragic
side effects.
Columbia Shuttle
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
941405 戴志宇
On February 1, 2003, seven astronauts
perished when the shuttle disintegrated as it
re-entered the earth’s atmosphere.
During launch, a piece of foam insulation
broke away from the propellant tank and
struck its left edge.
Seven astronauts
Problem

Is it just the technology problem?

Columbia Accident Investigation Board(CAIB)
said there are some problem in NASA’s
culture and politics.

NASA’s culture : Better, Faster, and Cheaper.
Available Data
Recency effect
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Foam insulation also broke
away on previous flights and
caused no harm.
NASA thought the break of
foam insulation was not a
problem that have to revise.
Available Data
Conservatism
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
The data from pervious flights
was ignored by senior
managers.
They failed to revise their belief
that the system was operating
properly.
Available Data
Overconfidence
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
After foam striking, engineers
concerned that it may cause
some problems and request
satellite imagery of the
spacecraft.
Managers was too confident
that there was no safety issue
and did not authorize.
Available Data
Overconfidence (cont.)
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
If they authorized satellite
imagery, the damage will be
discovered.
Astronauts can fix it
immediately and nobody will die.
Available Data
Selective perception
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Management of shuttle program
had shifted from an engineering
focus to a managerial focus.
Engineering problems were less
likely to be recognized and
more likely to be dominated by
schedules an budgets.
Mars Climate Orbiter &
Mars Polar Lander
941622 黃政明
• Mars climate orbiter
– Between metric units and English units.
– It was the failure of NASA`s systems engineering,and the
checks and balances in our processes to detect the error.
• Mars polar lander
– The vehicle`s descent engines prematurely shut down.
– The inappropriate respones of its engines was
attributed to software glitches.
• Culture
– “Better,Faster,and Cheaper.”
Available Data
Conservatism
Overconfidence
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Inadequate robustness in
processes,designs or operations,and
failure to heed early warnings.
Available Data
Conservatism
Sunk Cost
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
With budgets unable to tolerate
a substantial delay.However,it
was important not to “waste”
the effort put into the project to
that point.
Available Data
Conservatism
Selective Perception
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
With countless activities,it is
very possible that teams may
take a narrow view of their own
activities.
Available Data
Conservatism
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Even as the data showed that
it was drifting off
course,controllers largely
ignored the real data and
assumed it was on course.
New York City Subway
Communications System

Because of a radio network that
keeps transit officers
underground from talking with
officers patrolling the streets
above.

The new system is hobbled by
widespread interference that
garbles communication and
creates areas where radios
cannot receive properly.
Available Data
Conservatism
Overconfidence
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Project managers were apparently
conviced that the proposed design
would work or that all problems
could eventually be solved.
Available Data
Conservatism
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
When the project managers
failed to take the interference
warning seriously enough to
change their plans early in the
project.
Available Data
Conservatism
Illusion of Control
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
That somehow they had
enough control to assure a
successful outcome and
believed that the vendor would
take responsibility to solve the
problem.
941635 吳宜憲
Denver Baggage Handling

New Denver airport


One of nation’s largest public project work
Baggage–handling System

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

It’s very complex project in Denver
The steps of Baggage handling flow is
complicated
4000 baggages carts traveling throughout the
airport under control of 100 computer
Processing up to 1400 bags per minute
Time frame
1993 Scheduled for completion
1995 Real completion
Attend a demonstration but instead witnessed
a public disaster
1996 Scaling back the scope of the baggage
system and making necessary design changes
Still have problem
Only United Airline use it
2005 The system was abandoned
United Airline should be liable for 60 million
per year for 25 years
Available Data
Overconfidence
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
United Airline insisted that the
airport have fancier baggage
handling system which it
contended would sharply reduce
the delays
The prime contractor for the
project declared that no one would
turn down a $193 million contract
No one questioned whether it
could be done
Available Data
Sunk Cost
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
City of Denver and United
Airlines had already incurred high
costs and unwilling to disregard
these past expenditures
Available Data
Illusion of Control
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Illusion of control is identified for
its role on keeping the project alive
too long
941627 張書銘
Xbox 360
Product Life Timeline
Nov. 2005
Available on Market
Xbox 360 (cont.)
Product Life Timeline
Warranty prolong
Dec. 2006
Jul. 2007
Xbox 360 (cont.)
Product Life Timeline
Internet connection problem
Xbox 360 (cont.)
Product Life Timeline
Internet connection problem
Ruin game disk, Power cord fire hazard
Xbox 360 (cont.)
Product Life Timeline
Ruin game disk,
Power cord fire hazard
Internet connection problem
Red Ring of Death
Red Ring of Death
(三紅)
Normally cause in overheating which
will deal unrecoverable damages to the
game console.
Xbox 360 (cont.)
Product Life Timeline
Ruin game disk,
Power cord fire hazard
Internet connection problem
Warranty prolong, 90days → 1 yr
Red Ring of Death
Dec. 2006
Xbox 360 (cont.)
Product Life Timeline
Ruin game disk,
Power cord fire hazard
Internet connection problem
Warranty prolong, 1yr → 3 yrs
Red Ring of Death
Jul. 2007
Xbox 360
Product Life Timeline
Ruin game disk,
Power cord fire hazard
New chipset
Red Ring of Death
Internet connection problem
Dec. 2008

Expecting cause $1 billion cost.
└Every defect console cost $100.

Top gaming executive of Microsoft left the
company.
Game Consoles Announce Time
Xbox 360
Nov. 2005
Sony
P.S. 3
Nov. 2006
Nintendo
Wii
Dec. 2006
Game Consoles Announce Time
Xbox 360
Nov. 2005
P.S. 3
Nov. 2006
1 year
First mover advantage
Wii
Dec. 2006
Available Data
Conservatism
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Sell a product with many flaws known by
Microsoft. And unwilling to acknowledge problems.
Xbox 360 (cont.)
Product Life Timeline
Ruin game disk,
Power cord fire hazard
Internet connection problem
Warranty prolong, 90days → 1 yr
Red Ring of Death
Dec. 2006
About 11 months
Available Data
Groupthink
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
A big organization, but no one stop this.
They got collective myth.
Available Data
Sunk cost trap
Conservatism
Escalation of
Commitment
Groupthink
Illusion of
Control
Overconfidence
Recency
Selective
Perception
Sunk Cost
Developing, recalling, advertisement,
etc costs influence decisions they make.
Discussion
941621 江秉憲
Culture does affect outcome



Organizational factors explain about twice as
much of the variance in profit as do economic
factors. (Hansen & Wernerfelth, 1989)
Culture may be a significant factor in project
failure. (Ajmal & Koskinen, 2008)
A significant role of the project manager is to
merge several different organizational and
professional cultures into one project culture.
Biases vs CVM
Summary

The objective of this article has been to
determine if bringing these two traditions
together could prove useful in learning more
about project failures and then in
understanding how culture may provide the
environment within which there biases may
emerge.


A logical strategy for some organizations
would be to change management practices,
which in turn may set into motion events that
may minimize the emergence of systematic
biases.
EX. Boeing777 & Merck
Conclusion



The real objective of this study was not to
conclusively relate specific systematic biases
to project failure.
Providing insight into why projects fail.
Understanding how project culture may
inadvertently create an environment within
which these very natural biases emerge.